10 Rules for Successful Reverse Logistics Operations

by William K. Pollock, Strategies for Growth

In the course of running our own businesses, we have all recognized the importance of dividing our time effectively between managing the day-to-day operations, and planning for the future (although the reality of running the business often forces us to divide our time less than optimally on many of the planning aspects). Whatever business segments we serve, we typically find ourselves relying more heavily over time on various tools and disciplines such as Total Quality Management (TQM), Continuous Quality Improvement (CQI), Customer Relationship Management (CRM), etc., or just plain old common business sense, to barely make it from quarter-to-quarter, or year-to-year.

However, regardless of which tools we use, or names we give them, everything comes down to the same basic principal: we need to be able to offer the right products and services to our customers; deliver them in a timely fashion, and at a competitive price; and be able to handle customer support and returns quickly and efficiently in order to maintain the desired levels of customer satisfaction (and margins) that will support the future growth of the business. This is what reverse logistics is all about.

Each of the components that comprise the overall process is equally important, and each requires our full attention on an ongoing basis. This means that we must continually focus on meeting (and exceeding) our customers' needs; managing our business processes and logistics operations; providing our personnel with the most appropriate tools to support the customer; and last, but not least, fostering the ability to effectively manage growth to ensure that we are always able to attain the desired business results (Figure 1).

In assisting our clients over the years, we have identified the following 10 critical success factors that must be addressed to ensure successful reverse logistics operations:

1. Up-to-Date Support Offerings
It sounds obvious, but keeping your reverse logistics offerings up-to-date in today's ever-evolving service economy is a challenge. The changing market requirements and expectations, intensifying competition, and continual advances in new technology are all drivers that lead toward both the need, and the ability, to embed commensurate change in all of our products, services and solution offerings in order to remain responsive to our customers' total needs. Regardless of which industry segments we serve, product life cycles have declined dramatically over the last couple of decades. The implication of this trend is that we will need to maintain a continuous effort to improve and upgrade our support products over time to ensure that we consistently meet our customers' expectations. However, in order to do this effectively, we will also need to be able to anticipate what our customers' expectations will be at the end of the product life cycle—and this may be difficult, as the general rule of thumb is "the longer the cycle, the more difficult it will be to anticipate your customers' expectations".

2. Value-Added Services
Most products, especially the higher-priced or more complicated ones, neither sell nor operate by themselves, and require supplemental levels of service and support in order for customers to benefit from their full use and application. This may include anything from routine maintenance and customer technical support; to customization and application training; to real-time inventory management and state-of-the-art channel support. This trend in the high-tech services industry is decades old, and yet, many organizations have not yet made a complete transition to the "new" way of providing "cradle-to-grave" customer support. Thus, an organization's value-added services need to be focused on the total needs of its customers, and not merely initial installation and ongoing technical support. This requires a full focus on all of the pre- and post-sales-related activities that contribute to overall customer satisfaction.

3. Integrated Solutions
In most cases, it may be assumed that customers are not so much interested in the technical nature of the products or services they use, but rather in the breadth of the solutions they use to support their day-to-day business operations. As a result, ongoing customer support throughout the entire life cycle of the products they use has become a common requirement nowadays, typically involving a variety of post-sales service and support offerings including remote diagnostics and self-service via the Internet; consulting, training and engineering services; and a full array of customer support offerings. For these reasons, providers have to make sure that their customers' total requirements are always considered in the final specifications of the products and services they sell, and are fully integrated into the systems they use to support their customers.

4. Effective Business Processes
In order to be able to effectively deliver the products, services and solutions that our customers need, we also need to ensure that the business processes we utilize are appropriate, up-to-date, and that they get the job done. If they are not, then we may need to upgrade and/or re-engineer them where necessary to meet our customers' growing expectations without creating an overly-costly solution that effectively eats into our targeted profit margins. As our service and support offerings continue to be enhanced in order to provide customers with more comprehensive solutions, the processes required to support them will also need to change, and that may require more sophisticated skills and tools.

5. Empowerment and Accountability
As internal solutions and processes become more complex, it also becomes more likely that multiple personnel will get involved at different stages along the way. Although technology can help manage this to some extent, there is still a big risk that something may go wrong, or may fall "between the cracks." To avoid these possibilities requires a different approach and, more importantly, a different attitude. The presence of a "not my job" attitude among existing personnel would be devastating in this kind of environment. The best way to ensure success is to actively promote teamwork, empowerment and accountability. Many businesses have already successfully implemented empowered team efforts, with fully articulated accountability dedicated to "taking care of the customer" vs. merely "taking care of the problem."

6. Customer-Focused Front-Line Organization
Since the customer should always be the main focus of the business, we all need to make certain that the organization is structured appropriately to provide this focus. The most important interfaces with the customer are typically made by the sales and services components of the organization, as these personnel are in direct contact with the customer virtually all the time, either in person, by phone, or via the Internet. The way they interact with customers will ultimately determine the customers' perceptions of the organization as a whole. This means that the skill sets that are required must not only cover the technical aspects of customer support, but also the communications and interpersonal skills that let customers know they are being cared for properly. By creating (or refining) a companywide set of customer-focused, integrated processes, we can ensure that the organization will always be focusing squarely on the needs and expectations of the customer, thereby greatly increasing its chances for success.

7. Flexible and Responsive Back-End Organization
However, in order to allow front-line personnel to focus directly and effectively on customers, the organization will also require a flexible and responsive back-end organization. This part of the organization needs to be able to support its front-line personnel through the development of the tools and methods that enable the proper execution of all required service and customer support activities. This includes the formal documentation of the technologies utilized, and the instructions and guidance for applying them; the development of effective sales and support tools; and, last but not least, a documented set of escalation procedures. As such, the back-end organization will be responsible for setting the stage by creating an infrastructure that allows the front-line organization to perform its tasks without any undo hassle or interference.

8. State-of-the-Art Technology
Technology is one of the key drivers for change, and can provide most of the tools needed to improve business performance, as well as lowering the operational costs of the organization as a whole. We all know the rallying call to "do more with less"; and in most cases, technology, if applied correctly, is the principal tool that allows us to do so. The real challenge, however, is to determine what is realistically available, and how we can use it to our greatest advantage. With the nearly continuous flow of new technology at our disposal, the potential is there to improve all aspects of the business, as well as our ability to more effectively, and profitably, support the multitude of products, services and solutions we offer, as well as the specific business processes that are required to deliver them.

9. Applying the Right Technology
The availability and proliferation of technology solutions can be very confusing, and sometimes even misleading. The old saying that "you should never apply technology merely for technology's sake" is still very true. For this reason, we still need to carefully investigate alternative technologies, as well as their applications to our specific business situations. The best way to do this is to design our business processes and infrastructure around the most realistic technology solutions, and only focus on the ones that will directly help us in achieving our business objectives. Technology should be the means by which we may attain our business goals, but not the primary objective. As such, we will need to accept that not all technology will provide us with the benefits we are looking to gain—it is simply a tool to assist us in meeting our overall business objectives.

10. Managing Continuous Change
This last rule might actually be the most important one: how to manage and control the continuous change (and growth) process. We have seen many businesses develop and deploy initiatives for change that have been very successful; however, even more have turned into disasters or are abandoned halfway through the implementation. From our experience, it is critical that senior management always has a clear vision of the future of the company. This requires forward thinking, supported by market research and customer surveys that need to be translated into a clear vision and strategy. Once the vision and strategy are in place, an assessment can be made to determine a baseline for change, and a plan can be developed to make it all happen. Based on this comprehensive internal assessment, a change management plan can be designed and implemented, and the existing business processes can be carefully adapted to meet the new requirements.

Reverse logistics is not an end unto itself; it is part of a much larger, all-encompassing, process dedicated to taking care of the customer. As such, "how goes reverse logistics, also goes customer satisfaction" is the name of the game. Therefore, we believe that while following these 10 rules will not unconditionally guarantee success, it will certainly help to increase the chances. However, as we have seen time and time again, businesses that embrace only some of these rules for success typically only see some improvements. The maximum effect can only be achieved if all 10 rules are embraced, and executed, collectively, as they will all ultimately build upon one another, empowering your organization to support its customers the way they expect to be supported throughout the entire product/service life cycle experience.

William K. Pollock is president of Strategies For GrowthSM (SFGSM), the Westtown, Pennsylvania-based services consulting firm specializing in strategic business planning, services marketing, CRM consulting, market/survey research, and customer satisfaction measurement and tracking programs. During the past 25-plus years, Bill has conducted more than 250 strategic planning, customer survey and market research studies for clients all over the world. He is a frequent speaker at trade conferences, and has published more than 120 articles covering a wide range of services-related topics. He may be reached at 610-399-9717 or via e-mail at wkp@s4growth.com. SFGSM's website is accessible at www.s4growth.com.